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How democratic is arms-length government?Catherine Durose,Jonathan B. Justice andChris Skelcherargue that those who consider it to be an undemocratic phenomenon over-simplify, and make the case for assessing the question in a more citizen and community focussed manner.

It is relatively uncontroversial to assert that modern democracies should aspire not only to democracy but also to efficiency and reliance when and as appropriate on expert, evidence-based judgments in designing and implementing governing arrangements and public policies. It is also frequently accepted that these values are often at odds with one another. Can we have both democracy and efficiency in governance? The still-expanding practice of decentralization and delegation of a variety of activities from national and subnational governments to a variety of non-state organizations has been portrayed as evidence supporting both negative and affirmative answers to that question.

Is this practice of “arms-length government” – the use of organisations other than government departments or ministries to undertake public functions such as developing policies, allocating resources, delivering services, and performing a variety of regulatory and adjudicatory functions – counter-democratic? Our research suggests that the answer is something like “not necessarily,” and “it depends.” Close centralized state control is not in every case necessarily democracy-enhancing, but neither can it be dispensed with thoughtlessly.

The challenge for institutional designers and operators is to distinguish the specific combinations of objectives, contexts, and governing designs that can achieve a favourable balance of democracy, expertise, and efficiency. More controversially, we suggest that many well intentioned advocates who share those three broad goals may need to abandon their familiar state-centric perspectives on the problem if they hope to solve it.

One dominant, state-centric perspective on arms-length government sees it as delegated governance, and suggests that agency problems and conflicts of interest will tend to lead to a democratic deficit when governing tasks are delegated (by the elected representatives who lead the state, which is the seat of legitimate collective authority) to independent agencies or quasi- or non-governmental organizations.

From this perspective the use of “arms-length” or “third-party” entities may be portrayed as a way to ensure market efficiency, reliance on technical expertise, and consistent decision-making and implementation, albeit at the expense of diminishing democracy by reducing the directness of elected representatives’ control over decisions and operations. Or, in some variants of the argument, this delegation trades “democracy” in the form of maximizing individuals’ welfare against “democracy” in the form of engaging individuals actively and expanding their capacity for collective self-determination.

An alternative, “polycentric” perspective articulated in the work of scholars including Elinor and Vincent Ostrom, Bruno Frey, and Archon Fung, views the state not as the sole seat of legitimate governing authority but rather as one locus of democratically legitimate decision making and authority: often necessary, but not always an optimal or sufficient instrument of self-governance and collective action.

This perspective views individuals and communities rather than the state as the basic locus of legitimacy, and suggests that questions about the normative desirability of governing and service-provision arrangements should be approached empirically and on a case-specific basis. This approach complicates the task of design and evaluation by offering only “it depends” as the generic answer to the arms-length question, but compensates for the additional effort by offering a way for us to see and realise possibilities that might be missed by dismissing non-state institutions of collective action out of hand.

We recently completed a multi-year project, funded by the ESRC, that brought together scholars, practitioners and activists from several countries, sectors, and types of organisation to explore the question of “arms-length government” or “governing beyond the state” in research seminars we organised at the University of Birmingham and De Montfort University. We took away from those discussions an appreciation of the manifold ways in which the polycentric perspective offers not just a valuable theoretical framework for designing and evaluating governing arrangements but also a way to make sense of the astonishing variation in the types and quality of arrangements in use today.

One set of lessons drawn from the seminars is compiled in the pamphlet Beyond the State: Mobilizing and Co-Producing with Communities. In the first part of the pamphlet, organizers Alejandra Ibañez and Lina Jamoul and researcher Liz Richardson demonstrate how community organizing and self-organization can potentially mobilize local resources for the co-design and co-production of services and empower diverse communities through constructive advocacy and negotiation. They trace the progression from oppositional mobilization to the negotiation of arrangements that generated shared power to and within case studies from Chicago and London. In the second part, Catherine Needham, Janet Newman, Chris Sherwood, and Jess Steele note that the language of co-production encompasses both the liberation and empowerment of power to and power with, and a darker side of more coercive personalization of centrally designed and dispensed services.

In a subsequent review of academic literature on arms-length government, we built on a key insight we gained from the contributors to the pamphlet. A shift in perspective from the state-centric model of legitimate and accountable governance to a polycentric perspective facilitates the analysis of approaches to collective choice and public policies in ways that engage with the potential for undemocratic or inequitable results as one relevant design consideration, rather than as an inevitable product of “delegation” by elected officials. (The article, published in Policy & Politics, is available here.)

In short, blanket generalisations about the negative implications of arm’s-length government for the quality of democracy, based on narrowly state-centric models of democratic legitimacy and accountability, are often factually incorrect and unnecessarily limit the scope of analysis in ways that may foreclose opportunities to increase both democracy and efficiency. At the same time, in the world of political practice, the increasing frequency and diversity of applications in a variety of contexts provides an abundance of material for thoughtful empirical assessment, particularly if we approach it in a way that views strong state institutions as one part of a larger configuration of institutions, rather than as the only legitimate seat of democracy.

And in fact, it is clear that citizens, practitioners, and scholars around the world are taking up the challenges of designing, implementing, evaluating, and then redesigning configurations of institutions and practices that sometimes manage to increase community power (to and with) and democracy.

Dr Catherine Durose is Senior Lecturer and Director of Research in the Institute of Local Government Studies at the University of Birmingham and works with the Public Services Academy.

Jonathan B. Justice is Associate Professor, School of Public Policy & Administration, University of Delaware

Chris Skelcher is Professor of Public Governance, Institute of Local Government Studies at the University of Birmingham

This post is based on Iain Taylor-Allen’s MSc dissertation, which he completed at INLOGOV earlier this year.

Iain Taylor-Allen

New policy is emerging from a political doctrine espousing the need to re-engage society in governance through the decentralisation of power, responsibility and accountability to the lowest possible level. In addition, fiscal reality serves to accelerate the desire for change. Whilst the new order is still emerging, the extent of reform to date has brought local government organisations front and centre.

Despite an exhaustive review spanning three decades, and covering both the public and private sector improvement literature, I could find little suitably developed theory on sector-led improvement pertinent to the current (or comparable) context of the UK local government sector. In response I designed and undertook an original piece of inductive research with the purpose of establishing an understanding of local government sector-led improvement in the UK, and identifying the key components of a sustainable model of sector-led improvement.

The research revealed a dynamic understanding of local government sector-led improvement, providing a provisional, high level definition of the phenomena focused on three key themes:

Mutual responsibility for the local government sector to support itself to improve and to share learning and best practice

Securing effective and value-for-money improvements to achieve better outcomes for service users

Ownership for improvement with a focus on local priorities.

Following further analysis three headline themes emerged, each comprising of key components identified by interviewees as critical to establishing a sustainable model of local government sector-led improvement:

Leadership (engagement and ownership)

Credibility (assurance and improvement

Environment

Taken together the themes identified comprise the key components of what is referred to here as a provisional model of sustainable local government sector owned and led improvement, set in an environment that embraces the values identified to support the sector to realise improvement from within.

The model highlights the key components required for sector-led improvement to achieve the primary aim of positive citizen and service user outcomes, and be sustainable. These core components of leadership and credibility must exist within a reciprocally supportive, transparent and action focused environment characterised by a culture of mutual respect and ‘positive’ challenge from within the sector on behalf of the sector. Expressed in terms of establishing engagement as a basis for securing ownership for improvement from within the sector, effective leadership is a pre-requisite for developing and establishing the necessary level of credibility both within and outside the sector for the approach to be sustainable. Here, credibility is understood in terms of a cycle of assurance and improvement, focussed on robust performance base lining as a basis for securing the understanding and confidence to engage in improvement activity.

The findings highlight enthusiasm from within the sector to take on the challenge and responsibility of improvement, as well as drawing attention to the raft of potential benefits of a widespread adoption of the approach. Moreover, it provides researchers and practitioners alike a glimpse of the potential of a local government sector-led approach to improvement to enhance the efficiency and effectiveness of local service provision, and hopefully the much needed stimulus for consistent, applied research to develop policy and practice to realise the potential benefits.

Iain Taylor-Allen is an Adult Social Care Performance Manager. He has a keen interest in public management – specifically focusing on leadership, organisational culture and transformation; sector-led approaches to improvement; and the use of qualitative and quantitative measures to drive service/ contract/ organisational performance.

Quangos, non-departmental public bodies, or arm’s length bodies (ALBs), as they are variably termed, are a category of public organisations that operate with a degree of independence from ministers. These bodies have become an established feature of government, created to deliver policy, offer expertise and regulation (among other functions). Yet despite their proliferation they have been widely condemned by the political class and are subject to frequent reviews and culls. In reality few attempts to address the number and significance of bodies have, thus far, yielded much success. Indeed, hitherto the bonfires of quangos have smouldered rather than raged.

Two years on, the recently published Public Bodies 2012 report provides an overview of this reformed quango landscape. But what level of success has been attained? Each of the Government’s objectives is assessed in turn below, evaluating progress thus far and identifying future challenges to the reform agenda.

Are There Fewer Quangos?

The implementation of the reform programme was rapid, despite occurring in a period of relative instability (given budget and staffing reductions, as well as widespread civil service reform). Public Bodies 2012 states that since 2010 the number of NDPBs has been reduced by 220. While this denotes substantial progress on this objective, most bodies abolished thus far have been smaller advisory bodies and many functions have survived, being transferred into departments, executive agencies or merged into the remit of other bodies. Accordingly, while the numbers of arm’s length bodies is reducing, the scope of government is not necessarily shrinking.

In addition, a number of new bodies have been created by the coalition. Public Bodies 2012 notes that nine new bodies have been created since 2010 – six independent monitoring boards, the National Employment Savings Trust, the Office for Budgetary Responsibility and the Independent Commission for Aid Impact. However, the scope of Public Bodies 2012 is limited to NDPBs only, and this prevents a wider appreciation of changes in arm’s length bodies more generally. For example, some new executive agencies – such as the four created in the Department for Education, the Legal Aid Agency, the proposed National Crime Agency – and also other organisational forms such as the Office of Tax Simplification (an ‘independent office of the Treasury’) are NDPBs in a new form. The overt focus on numbers of NDPBs therefore misses the wider question of where functions of government are located – and many are remaining at arm’s length.

Have They Saved Money?

The belief that inefficiency and poor governance was rife within public bodies provided a key motivation to not only abolish but also reform ALB governance. In embarking on the reform programme, the Cabinet Office publicised anticipated savings of £2.6 billion by 2015 and ongoing savings of between £800 and £900 million a year after the Spending Review. A third of the initial saving (£0.9billion) was predicted to come from the abolition of two bodies, the Regional Development Agencies and Becta, yet the rest was based on imprecise and often incomparable data from departments. For example, some estimated reductions were based on spending review requirements, whilst others focused exclusively on savings from ALB reform.

This lack of consistency led an NAO report to argue that the Cabinet Office did ‘not yet have the means to confirm the removal of £2.6 billion from administrative budgets’ or to check that this money was the result of savings rather than cuts. In its response, the Government highlighted that this figure incorporates wider efficiency savings from bodies that will continue to exist, but acknowledged that the cost of reform was still unclear. Indeed, the projected savings stemming from reform have recently been reviewed, and Public Bodies 2012 puts administrative savings at £401 million in the year 2011/12.

Furthermore, in calculating the money saved, little attention has been directed to the costs of transition, failing to consider the difficulties of, for example, disposing of assets and addressing redundancy costs. While the NAO has estimated transition to potentially cost £830 million, Public Bodies 2012 estimates the cost of reform to be between £650 million and £800 million. This wide variation in estimates again highlights the challenges faced by the Cabinet Office in demonstrating that efficiencies are a direct result of the public bodies reform agenda.

Are They More Accountable?

Government has sought to increase the accountability of ALBs by bringing them closer to departments and Ministers. In addition to the newly created executive agencies, the functions of 9 bodies have been transferred to executive agencies (which are said to enjoy far less autonomy from Government compared to other forms of ALB); and 16 have been transferred into departments. For the bodies that remain, a process of triennial review is being implemented whereby each body is subject to independent review every three years – serving to provide departments and Ministers with more awareness of their ALBs and thus improve the accountability (and efficiency) of these bodies.

However, the idea that moving bodies closer to the centre will increase accountability is not as clear cut as it seems. There is a risk that functions in, for example, executive agencies, will not be scrutinised to the same extent as those in NDPBs where triennial reviews occur. In reducing the length of the arm at which key functions are exercised, there is therefore a risk that formal structures of accountability, enhanced as a part of the reform programme, are bypassed.

Conclusion

The public bodies reform programme has represented a radical attempt to streamline arm’s length governance in the UK. The speed at which reform has been implemented and the numerous bodies abolished or otherwise reformed denotes considerable success over these first two years of reform. However, it remains unclear as to whether the reform programme will deliver on the government’s objectives to improve the efficiency and accountability of the arm’s length governance landscape.

The Government has committed to implementing a ‘benefits realisation framework’ which will enable departments to ‘better define, measure and optimise all forms of value created in consistent and credible way’, with a greater emphasis on improving the efficiency and accountability of the bodies that survived the cull. With these new developments, there is a possibility that the initial momentum of reform will be maintained, allowing the government to deliver greater efficiency and accountability across the public bodies landscape.

There remains, however, a broader challenge in terms of how public bodies reform is reconciled with wider civil service reforms. Public bodies reform was, in part, a centripetal process involving the transfer of functions back into departments. In contrast, the Civil Service Reform Plan clearly has a centrifugal logic that is based around pushing functions away from Whitehall and traditional bureaucratic structures, through emerging models of service delivery such as outsourcing and mutualisation. The next phase of public bodies reform will need to reconcile these contrasting logics in a way that delivers efficiency while still serving the accountability goal of public bodies reform.

Katherine Tonkiss (INLOGOV) andKatharine Dommett (University of Sheffield)are Research Fellows on Shrinking the State, a research project exploring public bodies reform in the UK, and drawing on historical and international comparisons. The project is led by Professor Chris Skelcher (Birmingham) and Professor Matthew Flinders (Sheffield). The authors acknowledge the financial support of the ESRC (Grant Ref. ES/J010553/1). The views expressed are those of the authors.